Axe Inheritance Tax, Tories Urged

[Jimmy2Times]

Eton toffs, class war, chip on shoulder, everybody who doesn't support Labour is a Nazi or thick. And so on. You're the one with the irrational prejudice, condescension and superiority complex.

Handbags at dawn ladies, take that you rotter.

[mcfc98]

It's the same principle whereby you don't pay VAT on a second-hand car. That was paid when it was bought new by its first owner, and you only have to pay tax on goods or services bought once.

That is very annoying in Canada (or at least smelly Quebec), they tax you on purchase of a second hand car so a car can be taxed as many times as it's sold. Ridiculous.

[gordonbrown]

Although the likes of David Beckham and JK Rowling have done quite well with making use of talent and taking opportunities.

By making your MAIN residence free of IHT what I think their Tories are trying to do is trying to help the upper middle class (for whom their main residence is most of their wealth) whilst still taxing the super-rich (for whom their main residence is only a small part). It's trying to win over potential Tory voters, which in a democracy is exactly what you'd expect the Tories to do.

Abolishing IHT altogether seems wrong though, since it is a "Robin Hood" redistributive tax.

I wouldn't say it was a Robin Hood tax exactly. I don't really see the creation and preservation of an upper middle class as good for our society. Let each individual in each generation rise or fall on his own merits an efforts. It will encourage dynamism, had work and fortitude.

[nick22abdn]

Eton toffs, class war, chip on shoulder, everybody who doesn't support Labour is a Nazi or thick. And so on. You're the one with the irrational prejudice, condescension and superiority complex.

Couldn't agree with you more. The majority of these posts appear to be from left wing, Guardian readers. Not rational arguments for or against economic benefits, merely shouting that they don't have any money so others shouldn't.

Everyone gets taxed on their income at source ie. income tax. The government has already taken their share, any money accrued through someones lifetime is theirs, whether it is from a house, business, savings etc. If someone has worked hard to build up a business, created jobs etc , has paid corporation and income tax throughout (paying into the system far more than they have taken out) and has 1 million saved at the point that they die, it should be entirely up to them who it is given to. The government has no right to a single penny of it.

[Mr Yogi]

Inheritance tax is levied on one's estate after death before it is distributed according to one's will. It's very name therefore, is a misnomer. It is not a tax on inheritance - it is a tax on death. The old name of 'Death Duty' was far more appropriate, if a little macabre.

It is interesting and not a little amusing that the campaign against IHT, led by the absurd Daily Express, has gathered momentum only since house price inflation has pushed more 'ordinary' people through the quite generous £300k threshold.

'Increase the threshold in line with house prices!', comes the cry. Or 'Abolish this iniquitous tax!'.

All this ignores completely the fact that in the vast majority of cases this wealth has not been earned; it has been accumulated purely through the deceased person's house rising in value over the last few years. Therefore it has not been previously taxed.

Now no-one is seriously suggesting that tax should be levied on the profits made on one's main residence. This concession is a time honoured feature of our tax laws and any attempt to change it would be unthinkable, not to mention political suicide!

So I guess that there is a logical continuation to this argument; you are not taxed on the profits on your house while you are alive - why should you be taxed on them when you die?

OK then, lets abolish Inheritance Tax!

Capital Gains Tax is levied on the recipiants of profits or windfall gains, subject to an annual allowance.

Surely a legacy is a windfall gain. Why should it not be taxed?

Legacies are not subject to CGT currently because IHT has already been levied on the estate of the deceased. Remove IHT however, and there is no logical argument whatsoever for allowing inherited wealth to go untaxed.

After all, this money has not been previously taxed due to the concession on the profits made on one's own home. Can anyone give me a serious reason why this concession should be transferable to one's children?

No? - thought not.

So there we are - shift the tax liability from the deceased to the beneficiary.

Do the opponents of IHT seriously believe that any government would miss this trick?

Edited August 18, 2007 by Mr Yogi

[The Ayatollah Buggeri]

This makes me really angry - trust the Tories to come up with a policy idea that will drag us back to the days of land barons and serfs. If you're not on the property ladder now, you never will be and neither will your children, or their children... grrr!

Precisely the opposite, in many cases. Maintaining IHT at its current proportional rate will mean that if you're a priced-out child of an OO, the IHT will remove what is about your last chance of ever getting on it, i.e. by inheriting in middle age. What Labour wants is a steady increase in the 9% of estates which are currently eligible for IHT (up from 2% when Labour took office), so that as the current generation of OOs die off, their wealth is grabbed by the state and their children are forced into Soviet-style reliance on the government for a roof over their head. Allowing wealth to be passed between generations encourages the different generations of a family to support each other and enables them to become financially independent from the state. And the child of a very poor family has even more of an incentive to get off his backside and make a success of his life rather than fester on benefits, because he knows that he'll be able to give his own children a better start than he had.

There is a big difference between a car/CD and a house. We're talking about capital gains. How many car owners sell their's for a gain? I'd wager 99.9% sell at a loss.

The difference is in a principle of taxation whereby if your asset appreciates in value, the government takes a cut of your good fortune; but if it depreciates in value, you have to bear the entire loss yourself. I'm arguing that it's unfair to impose a tax take on capital gains without also having a tax refund on capital losses.

[Daft Boy]

The difference is in a principle of taxation whereby if your asset appreciates in value, the government takes a cut of your good fortune; but if it depreciates in value, you have to bear the entire loss yourself. I'm arguing that it's unfair to impose a tax take on capital gains without also having a tax refund on capital losses.

I agree . I have sometimes wondered why houses never depreciate year on year the same as cars. Buildings also become run down and dated. I can understand land appreciation but not a crumbling pile of bricks built on top of it..

[nick22abdn]

I agree . I have sometimes wondered why houses never depreciate year on year the same as cars. Buildings also become run down and dated. I can understand land appreciation but not a crumbling pile of bricks built on top of it..

Houses do depreciate in value year on year (with the exception of some period property, listed buildings etc - same as classic cars etc). It is the value of the land that increases, making property prices rise. This is why a ten year old house will sell for less than an identical newly built one in the same location.

[Daft Boy]

Houses do depreciate in value year on year (with the exception of some period property, listed buildings etc - same as classic cars etc). It is the value of the land that increases, making property prices rise. This is why a ten year old house will sell for less than an identical newly built one in the same location.

It would be interesting to see some professional comments in response to this interesting post.

[the end is a bit nigher]

It is interesting and not a little amusing that the campaign against IHT, led by the absurd Daily Express, has gathered momentum only since house price inflation has pushed more 'ordinary' people through the quite generous £300k threshold.

well spotted - this is just nimbyism in another form - it's ok while it's happening to someone else

I had been a life long Tory until recently - i have lost count of the number of times Spock and Osborne will be discussing something to do with policy and then out of the blue will drop in the line about 'keeping mortgage payments low' blah......playing off the back of the housing boom certainly seems to be a Tory policy now - i am also sick of the view that the IHT threshold should have been increased at the same rate as HPI - my capital gains on shares etc. have been above the CGT threshold for the last 3 years but i haven't seen anyone rushing out to raise that so i don't have to pay less tax

in future I shall vote UKIP - at least they openly admit house prices are too high and need to come down

[expatowner]

In the Gospel of Luke, Jesus tells the story of a man who has two sons. The younger demands his share of his inheritance while his father is still living, and goes off to a distant country where he "waste his substance with riotous living", and eventually has to take work as a swine herder. There he comes to his senses, and determines to return home and throw himself on his father's mercy. But when he returns home, his father greets him with open arms, and hardly gives him a chance to express his repentance; he kills a "fatted calf" to celebrate his return. The older brother becomes jealous at the favored treatment of his faithless brother and upset at the lack of reward for his own faithfulness.

[Andy Jones]

You have to be a bit of a dipstick to pay inheritance tax.

There are ample ways of avoiding it. Personally I buy diamonds in Geneva and bury them in the back garden.

ANDY

Edited August 23, 2007 by Andy Jones